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"We rate EXTERRAN HOLDINGS INC (EXH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 31.3% when compared to the same quarter one year prior, rising from $9.34 million to $12.26 million.
- Net operating cash flow has increased to $68.71 million or 18.72% when compared to the same quarter last year. In addition, EXTERRAN HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -75.34%.
- Compared to its closing price of one year ago, EXH's share price has jumped by 28.08%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The gross profit margin for EXTERRAN HOLDINGS INC is currently lower than what is desirable, coming in at 34.63%. Regardless of EXH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EXH's net profit margin of 1.65% is significantly lower than the industry average.
- The debt-to-equity ratio of 1.05 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, EXH maintains a poor quick ratio of 0.95, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: EXH Ratings Report